WIREDGOV

Last night, the European Commission has sent to Member States for consultation a draft proposal for a State aid Temporary Framework to support the economy in the context of the COVID-19 outbreak, based on Article 107(3)(b) TFEU to remedy a serious disturbance across the EU economy.

Executive Vice-President Margrethe Vestager said:

“Managing the economic impact of the COVID-19 outbreak requires decisive action. We need to act fast. We need to act in a coordinated manner. EU State aid rules provide a toolbox for Member States to take swift and effective action. We have two common goals:

First, that businesses have the liquidity to keep operating, or to put a temporary freeze on their activities, if need be, and that support reaches the businesses that need it. Second, that support for businesses in one Member State does not undermine the unity that Europe needs, especially during a crisis. Because we have to be able to rely on the European single market, to help our economy weather the outbreak, and bounce back strongly afterwards.

With this in mind, the Commission will enable Member States to use the full flexibility foreseen under State aid rules to tackle this unprecedented situation.

On Friday, the Commission adopted a Communication setting out the many possibilities that already exist. I also announced that we are working on a new Temporary Framework, to complement existing possibilities. This is based on Article 107(3)(b) TFEU to remedy a serious disturbance in the economy.

Since Friday, the measures that Member States have had to take, to slow down the spread of the COVID-19 outbreak, have made this work even more urgent and necessary. We have therefore accelerated our work and have last night sent a draft proposal to seek the views of Member States to make sure that it is fit for purpose. It will apply across the entire Union.

Our aim is to have the new Temporary Framework in place in the next few days. For comparison, during the financial crisis it took three weeks from the launch of the internal consultation of the framework until adoption. We are able to act even faster today than we did in response to the financial crisis a decade ago because we are building on the experience gained from the 2009 framework.

The new Temporary Framework will enable Member States to (i) set up schemes direct grants (or tax advantages) up to €500,000 to a company, (ii) give subsidised State guarantees on bank loans, (iii) enable public and private loans with subsidised interest rates. Finally (iv), the new Temporary Framework will recognise the important role of the banking sector to deal with the economic effects of the COVID-19 outbreak, namely to channel aid to final customers, in particular small and medium-sized enterprises. The Temporary Framework makes clear that such aid is direct aid to the banks' customers, not to the banks themselves. And it gives guidance on how to minimise any undue residual aid to the banks in line with EU rules.

The new Framework does not replace but complements the toolbox with many other possibilities already available to Member States in line with State aid rules – be it general measures to provide wage subsidies and suspension of tax payments for all companies, or providing compensation to companies for damages suffered due to the COVID-19 outbreak. Compensation can in particular be useful to support sectors that were hit particularly hard.

To give one important example: if we want to minimise permanent layoffs and damage to the European aviation sector, urgent action is necessary. The Commission is ready to work with Member States immediately to find workable solutions that preserve this important part of our economy, using the full flexibility under State aid rules. For example, compensation can be granted to airlines under Article 107(2)(b) TFEU for damages suffered due to the COVID-19 outbreak, even if they have received rescue aid in the last ten years. In other words, the “one time last time” principle does not apply.

Finally, the Commission is also working on templates to facilitate the work to design measures to tackle the impact of the COVID-19 outbreak. The first one on how to compensate companies for damages will be put online today. We have set up a mailbox and a dedicated phone line for Member States, which is open seven days a week. And most importantly, we have made sure that our decisions can be taken very fast.

All of this to say: the European Commission will continue to provide the necessary support to governments and citizens.”

Click here for the full press release